When working with the CAPM, which of the following factors can be determined with the most precision?

Question

Quizplus · Accepted Answer

The beta coefficient of "the market," which is the same as the beta of an average stock, can be determined with the most precision because it is calculated as the average of all individual stock betas and is a widely accepted measure of market risk. The other factors, such as the market risk premium and the risk-free rate, involve some level of subjectivity in their estimation and can vary depending on the source or method used. The precision of beta coefficient, bi, of a relatively safe stock can also be influenced by the stock's characteristics and may not be as reliable as the market beta.

When Working with the CAPM, Which of the Following Factors